CSR: Like Boral, only worse?

Question

I would like your opinion on CSR. I notice that you have not had a favourable opinion on CSR in recent years. In recent months the price has increased by around 15%. With signs that residential building activity may peak soon would now be a good time to sell?

Answer

Hello. Yes, the reason we’ve not had a favourable view on CSR for some time (ever?) is that we regard it as similar to Boral (see our recent answer to another query – Boral has been a chronic underperformer). Many building materials companies (ie their management teams) have a terrible record at capital allocation, as you can see by CSR’s -2% p.a. total return performance over the past decade (admittedly the business portfolio has changed a bit over that time).

Despite the poor long-term performance, CSR appears to have been benefiting from the current building boom as you indicate, with profits and the share price recovering very strongly in recent years. We’re unable to provide personal advice, so I can’t say what you should do, but my view is that CSR is likely to be a very cyclical business and an underperformer over a full cycle (say 10 years or more). Regards, James G.

Want access to our latest research and new buy ideas?

James Greenhalgh

Related Q&A With Our Experts

Q.
Are building products companies such as CSR going to emerge as more profitable given the huge amount of repairs required for flood ravaged communities? Also if one buys CSR today for the going price $1.66, will the purchaser benefit from the propo...

Q.
Your decision to cease coverage of CSR disappoints me. Granted, its not performing particularly well but neither are a lot of other " prominent" stocks, TIM, SIP, IFM included. What is your policy on coverage of widely held stocks ?

InvestSMART Publishing Pty Ltd holds Australian Financial Securities Licence (AFSL) 282288.
The content of this website is general in nature and does not take the personal situation of any user of this website into consideration.
A user of this website should seek financial advice specific to that user’s situation before making any financial decision.
Past performance of any security or financial product is not a reliable indicator of future performance. InvestSMART Publishing Pty Ltd
encourages users of this website to view investing as a long-term pursuit.